Competition willing for master trusts

ADMINISTRATION platforms may not sound like an exciting concept, but they are generating hot competition in the financial planning industry.

The number of alternative platforms has mushroomed over the years, to the point where many investors may be dazzled by the choices.

For most investors in managed funds, administration platforms would be better known as master trusts.

More than $90 billion is in-vested through master trusts, according to research group ASSIRT, and the well-known brands include ASGARD, Navigator, Flexiplan and Summit.

In more recent times, ‘wrap’ services have gained significant market share. The two stand-out leaders are BT and Macquarie, which collectively have $11.5 billion in funds under administration.

(The BT and Macquarie administration services are completely separate from the investment management activities for which they are well known.)

Recently, ASGARD lifted the competitive stakes by launching a service with three different offerings – a master trust, plus a wrap, and separately managed accounts (SMAs).

ASGARD said this was the first administration service of its kind in the Australian market.

The key selling point is that advisers can select the administration platform that suits their clients and their business.

“We feel the debate has now moved on from wrap versus master trust,” ASGARD marketing director Kate Mulligan said.

“It now is [whether you] can offer your client the breadth of services that our managed accounts platform offers.”

There are several key reasons for the growth of administration platforms generally over the past decade.

They provide a lot of flexibility, allowing small retail investors to switch their money between a broad range of investment managers and investment styles.

They also provide consolidated reports on the performance of investment portfolios, including details of income, capital gains, tax liabilities and so on. This saves individuals the time and effort of keeping track of paperwork.

ASGARD describes master trusts as a “high touch” option, for advisers who handle most administration in-house and provide paper reports to their clients. Its wrap is an online service (with minimal paper reporting) and offers corresponding cost efficiencies.

Macquarie Wrap Solutions national sales manager Giulio Russo believes many advisers are attract-ed to the “asset portability” of wraps.

Under a custodial wrap structure, investors are generally able to move their assets in to and out of the service without crystallising capital gains as they remain the beneficial owner of the underlying assets.

This is not often possible in a traditional master trust, Mr Russo said.

SMAs – also known as individually managed accounts – offer similar benefits but with added flexibility and tax benefits.

ASGARD’s SMA is described as its “low adviser touch” option, with maximum outsourcing of administration.

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